India penalizes 19 banks for derivatives violations

The Reserve Bank of India has imposed penalties on 19 commercial banks, as detailed below, in exercise of the powers vested with it under the provisions of Section 47A(1)(b) read with Section 46(4)(i) of the Banking Regulation Act, 1949.

The penalties have been imposed on these banks for contravention of various instructions issued by the Reserve Bank in respect of derivatives, such as, failure to carry out due diligence in regard to suitability of products, selling derivative products to users not having risk management policies and not verifying the underlying/ adequacy of underlying and eligible limits under past performance route.

The Reserve Bank had issued Show Cause Notices to these banks. In response to this, the banks submitted their written replies. On a careful examination of the banks’ written replies and the oral submissions made during the personal hearings, the Reserve Bank found that the violations were established and the penalties were thus imposed.

Sl. No. Name of banks Penalty (` in Lakh)
1 Axis Bank Ltd 15.00
2 Barclays Bank PLC 15.00
3 HDFC Bank Ltd 15.00
4 ICICI Bank Ltd 15.00
5 Kotak Mahindra Bank Limited 15.00
6 Yes Bank Ltd 15.00
7 BNP Paribas 10.00
8 Citi Bank NA 10.00
9 Credit Agricole - CIB 10.00
10 Development Credit Bank Ltd. 10.00
11 ING Vysya Bank Ltd 10.00
12 Royal Bank of Scotland 10.00
13 Standard Chartered Bank 10.00
14 State Bank of India 10.00
15 Bank of America NA 5.00
16 DBS Bank Ltd. 5.00
17 Deutsche Bank AG 5.00
18 Hongkong and Shanghai Banking Corporation Ltd. 5.00
19 JP Morgan Chase Bank NA 5.00
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